What is the amount of net cash?

Question

Payment of taxes-$18000, Interest payment on debt $17000, Cash from equip. sale $115,000, Contributions from the owners $ 125,000, Cash from sales to clients $140,000, The receipt of loan payments $16,000 and purchases for merchandise for selling $130,000. The common stock was issued to purchase land valued at $60,000.

What is the amount of net cash used by operating activities?

My answer is $95,000. Is that right?

Answer 1

I would calculat it as:

CAsh sales $140,000

-  COGS $130,000

- Taxes - $18,000

- Interest Exp $17,000

equalling $9,000.

am i reading that right though that the payment of taxes is negative 18K?  so it's a tax benefit right??  implying negative earnings.

Anyway, rationale is:

cash sales is def. Operating cash.

Interest payment is also operating. However, repayment of, or additional borrowings, are financing activities, but the interest exp is an operating expense.

Cash from equipment sales is an Investing Cash Flow.  the gain/loss on sale of equip might be added back in calculating Op Cash Flow, but that's not what's written above...it says cash proceeds.  not gain from sale...

Loan payment receipts is Financing Cash flow.

Merchandise purchase is an operating cost, although this can be a tricky one as in some instances, purchases of inventory are treated as Investing Cash Flow.

Issuance of common stock is Financing Cash Flow, and using the cash to purchase land is an Investing Cash Flow.